Ruth Kevan was using cash from new investors to spend on herself and pay out fake interest rates when it came to Christmas withdrawals. Photo by Stacy Thomas. Source: News Limited

IT started as a little fund to encourage her tax office colleagues to save a few pounds for Christmas.

But as it took off, so did Ruth Kevan's money-making ambitions.

The 58-year-old HM Revenue and Customs manager made bogus promises of interest rate returns up to 14.5 per cent to encourage 40 staff to invest thousands of pounds in her Christmas savings club.

As a result, some paid in their retirement and wedding funds.

By now, however, Kevan had turned the club into a Ponzi-style scam and was siphoning off cash to fund her own luxury lifestyle.

In all, the civil servant stole more than Pound160,000 which she spent on extravagant holidays, expensive clothes and trips to watch Scotland play in the rugby Six Nations.

Even her husband, who worked in the same office, was unaware of the scam.

Yesterday, as her duped colleagues spoke of their 'betrayal', Kevan was beginning a two-and-a-half year jail term. Basildon Crown Court heard she had run the Christmas savings club at the tax office in Southend, Essex, since the late 1970s.

The scheme started as an honest way to encourage workers to save for the festive season. But from 2001 she urged them to invest larger sums with the promise of interest rates way above levels offered by banks and building societies on the high street.

Some of those who invested their money thought she had negotiated a special rate with the bank where the money was deposited.

In fact, she was using the cash from new investors to spend on herself and pay out fake interest rates when it came to Christmas withdrawals. To prevent a 'run' on the fund at Christmas she offered bonus interest rates to keep the money in the account.

Colleagues invested a total of more than Pound212,000, but only Pound48,000 remained by the time the fraud was discovered. Michael Warren, defending, said Kevan had resorted to the scam after she became used to having more money thanks to a Pound35,000 bequest from her father-in-law.

He said: 'What is abundantly clear is that she is extremely remorseful and ashamed of what happened. This scheme was not fraudulently run from the outset.

'I think we can only speculate as to what happened but around the time the fraud started her father-in-law passed away and left her with an inheritance of Pound35,000, and she probably got accustomed to a nice lifestyle. She was not aware the deficit had reached such a level - the matter had just got out of hand.'

The fraud was discovered when HMRC investigators became suspicious of large sums of money being deposited in Kevan's personal account.

She was arrested at work in April and confessed during a police interview. At court she admitted 21 charges of fraud and one of theft.

Sentencing her, Recorder George Pulman QC said: 'You ran the Christmas club at HMRC in Southend and encouraged people to put in more than just a few pounds.

'You lied to them as to the rates of interest, rates which were not available anywhere else commercially.

'You have expressed shame and made clear you know your behaviour has let down friends and others who trusted you with their savings.

'You frittered the money away on a luxury lifestyle of holidays and nice clothes.'

One colleague wrote in a victim impact statement: 'I feel betrayed by Ruth as I trusted her implicitly.'

The court heard that Kevan, who lived in a Pound200,000 house in Southend, planned to try to pay back the money when she started receiving her pension in a few years' time.

Proceeds of crime proceedings are ongoing to recover the victims' money, although investigators believe they may receive as little as a quarter of what was invested.

Kevan worked in a clerical role at HMRC. Following her suspension from duty she was dismissed in August 2012.

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